Yesterday the CFTC adopted final regulations harmonizing the compliance obligations of registered investment companies (RICs) that are also required to register as commodity pool operators (CPOs). Harmonization of the CFTC’s regulatory regime with that of the SEC is “grounded in the concept of substituted compliance” in that “CPOS or RICs that maintain compliance under the SEC regime would be deemed to fulfill their obligations” under CFTC regulations. Harmonization eliminates discrepant reporting instructions and reduces unnecessary costs for investors.
In short, the new regulations allow “dually registered entities to satisfy CFTC disclosure, reporting, [and] recordkeeping requirements by complying with SEC rules.” The need for harmonization became apparent when the CFTC received comments that it was “imposing duplicative, inconsistent, and possibly conflicting disclosure and reporting requirements” on these dually registered entities.
These regulations represent months of work and feedback from all sectors involved. Part of the rule will become effective once published in the Federal Register, and the remainder will become effective 30 or 60 days after publication.
Click here to read the final rule.